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Undeterred by rejection of their proposal to hike gas prices, distributors try again

  • Faysal Atik, Staff Correspondent,
    Published: 2022-01-21 03:36:26 BdST

The Bangladesh Energy Regulatory Commission or BERC turned down a proposal from the distributors to hike gas prices in early January because all the requirements for filing the applications were “not fulfilled”. Some others are now trying to push it through.

“We had received proposals from several distributors, but we rejected them as they were not pursuant to BERC laws and regulations,” BERC Chairman Md Abdul Jalil said on Thursday.

“We had asked them to resend the proposals by following the rules. Two to three companies have applied again.” Some eight to 10 documents, such as fees and audit reports, have to be submitted with the applications.

The government has seven companies in the gas sector, six for distribution and one for transmission. 

The retail prices are fixed by adding the price, at which the transmission company supplies the gas, to operation and costs of the companies.

BERC has reservations about the distributors asking for a retail price hike even before bulk gas prices go up.

“And there is no good reason to increase the wholesale prices of gas right now, much less the retail prices. It beats us why the distributors are still keen on a price hike,” a BERC official said asking not to be named as he was not authorised to talk to the media on the issue at this stage.

“We’ve initially rejected their petition. Let’s see what happens next.”

According to media reports, distributors proposed to increase retail gas prices by 117 percent, asking BERC to raise the monthly cost of double-burner stove connections from Tk 975 to Tk 2,100 and single-burner stove from Tk 925 to Tk 2,000 at the consumer level.

They also asked the regulator to raise prices for prepaid, industrial, power plant,  captive, and CNG refuelling station connections.

“We're not thinking about how much the proposed hike is. The technical committee will look into it,” said BERC Chairman Jalil. “What’s crucial is that we’ll only think about it once all the companies ask for it.”

Md Abdul Mannan Patwary, managing director of distributor Pashchimanchal Gas Company Limited, said they forwarded the proposal to the regulator a second time along with all required papers and information.

On why the hike was proposed, he said, “That’s in the application. I don’t want to say anything now.”

Another BERC official said, “Nothing over the past two years could possibly cause this much hike. Of the 3,050 million cubic feet (MMcf) of gas, 2,300 MMcf is our own, of which the price has been unchanged.

“Secondly, another 600 MMcf comes from imported LNG. The price of that is capped due to a long-term deal and will remain that way for the next decade.”

“The prices of the remaining 150 MMcf of gas might fluctuate. And in that case, a Tk 5 fluctuation in prices for each unit won’t make much of a  difference. How much would that impact the market? You can do the math,” argued the official.

BERC raised gas prices for the last time in mid-2019 by 32.8 percent on an average, where the cost went up from Tk 7.38 to Tk 9.8 per unit at the consumer level.

For households, tariff for a single burner stove connection rose from Tk 750 to Tk 925 while that for the double burner climbed from Tk 800 to Tk 975. Household prepaid metre tariff was raised from Tk 9.1 to Tk 12.6 per unit.

At that time, the price of CNG was increased from Tk 38 to Tk 43 per cubic metre. Along with that, gas prices in power, fertiliser, industrial and commercial sectors were raised by 35 to 65 percent.

The latest bid to up the prices in the aftermath of a spike in diesel prices by the end of last year has left businesses unimpressed.

The Federation of Bangladesh Chambers of Commerce and Industry on Wednesday said in a statement that a gas price hike will hamper the economy’s recovery from the effects of the coronavirus pandemic. FBCCI leaders also voiced their concern in a meeting.